The U.S. Department of Labor has made a significant decision to roll back a Trump-era rule that allowed self-employed individuals and small businesses to purchase cheaper association health plans. These plans, which did not fully comply with Affordable Care Act requirements, provided a more affordable option for small business owners and entrepreneurs.
According to Bloomberg, the new Biden rule issued by the DOL’s Employee Benefits Security Administration will take effect 60 days after its publication in the Federal Register. This rule replaces a 2018 regulation under the Trump administration that expanded the definition of “employer,” allowing small businesses to pool resources and purchase health insurance under the ACA.
While some business groups have expressed concerns about rising healthcare costs and oppose the rule’s rescinding, the ACA mandates that employer-sponsored health plans must adhere to comprehensive coverage requirements. This can be financially burdensome for smaller businesses, leading many to turn to association health plans as a cost-effective alternative.
Association health plans have been accessible to small businesses through methods like self-insurance and stop-loss plans to limit losses. However, before the 2018 Trump rule, AHPs were only available to small business groups within common industries. Portions of the rule were struck down in 2019, leading to the discontinuation of AHPs established under the rule.
This decision by the Department of Labor will have a significant impact on small businesses and entrepreneurs who have relied on these cheaper health insurance options. The debate over healthcare costs and coverage requirements continues as the new rule takes effect.